The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

 

Faced with a health system or hospital budget shortfall?

Peer benchmarking could lead to the answer.

By Truven Staff

Tell us if this health system’s challenge sounds familiar: CHRISTUS Trinity Mother Frances Health System, located in Northeast Texas, was facing a staggering potential setback when a number of payer contracts changed. The difference amounted to a $25 million shortfall in their budget’s revenue.

The system’s first reaction might have been to issue an across-the-board expense reduction mandate to make up the budget difference. We all know that can happen a lot in the industry, but it doesn’t always produce the results healthcare organizations need, and quality of care can be impacted.

Instead, this system chose a data-driven, strategic savings approach as the path forward, with an eye on long-term financial independence from these types of shortfalls.

A look at the targeted expenses

Using a comprehensive comparative database, the system was able to benchmark costs, productivity and resource utilization against best-in-class facilities of similar size and demographics.

Leaders identified cost improvement opportunities in areas such as supply, labor costs, length of stay and purchased services — areas where the system was not at the same level as high-performing peers in terms of expenditures.

The benchmarking information from the database was also used as a call to action for staff to find methods of improving processes and cost management. CHRISTUS Trinity Mother Frances leaders formed teams and assigned financial targets. Teams then used the database to answer the question, “If another health system is able to keep supply costs at this level, what can we do to bring our costs to that level with no bearing on our patient care or satisfaction?” The health system also created a dedicated project management office to help guide the process. The results of these efforts (in box below) speak for themselves.

If you’d like more information on how the health system achieved this result, please reach out to us. You can also read the full case study here.

 

 


Poverty and Obesity: This Is a Link That We Need to Break

By Truven Staff
Mike Taylor imageIt’s no secret that obesity has become a significant health risk in the US, especially in the last 25 years. In many states, more than 30% of the population is obese, and the rates are climbing every year.  As has been reported, obesity can lead to diabetes, heart disease, arthritis, certain cancers and many other chronic diseases that lead to billions of dollars in healthcare costs annually. As a society, we certainly have a financial incentive to reverse our weight gain. Those who would benefit the most are, sadly, too often the people who have no real means of achieving this.

The link between obesity and poverty has been recognized but often under-reported.  Many inner cities are effectively “food deserts”, with few if any sellers of high quality food. Fruits and vegetables are often in short supply and may be prohibitively expensive. Gardening is often not an option or an available skill.  High calorie foods laden with fat and carbohydrates are much cheaper and more available than high quality foods in inner cities. On top of these challenges in obtaining decent food, even pound-shedding physical activity can be out of reach because safe areas to exercise are often not available.

The US obesity problem is complex—only for some is it a matter of diet; for many people living in poverty, obesity is just one result of a socio-economic dilemma. Public health solutions need to be wide reaching and address more than dietary approaches for this unhealthy part of our population.

Michael L Taylor, MD FACP
Chief Medical Officer

Price Transparency: How much will that medical procedure cost?

By Truven Staff
Bill Bithoney imageWhen buying a new car I want to know the exact price including financing charges before I sign on the dotted line. When I had my roof repaired last week I knew its exact cost before the work began.  However, if I call a hospital  to inquire how much a hip replacement will cost for my balky limb, the answer I will get from most hospitals is either vague or more typically no answer at all. You might be surprised to learn that many hospitals really do not know the cost for even relatively common healthcare services received in their facilities.

Researchers at the University of Iowa recently found in a survey of 120 hospitals that only 19 were able to give consumers an exact price for a hip replacement. Further when prices were given, they varied by roughly 1200%, from $11,000 to over $125,000, for the same procedure! They were provided with standard assumptions to help ensure accurate comparisons. Correcting this surprising gap in knowledge about their own costs is a critical step toward improving the cost of care. And providing apples-to-apples cost information to patients is the next step because, in a significant departure from today’s ‘normal,’ patients are becoming increasingly price sensitive.

Self insured employers and health plans are considering offering incentives such as splitting the cost savings when employees choose lower cost, high quality providers.  If employers rewarded employees for choosing lower cost providers who have demonstrably excellent outcomes, the business of elective surgery and non-emergent medicine would take a long stride forward in becoming price sensitive.  Most experts agree that this would quickly result in hospitals beginning to compete on price – and that would begin bending the health care cost curve in the right direction!

Dr William Bithoney

Hospitals Try Housecalls

By Truven Staff
Linda MacCracken imageCheers to the many providers looking at alternatives to the use of the Emergency Department.  They are focusing on defining the right use of the ED – for emergent symptoms and accessible care – and discovering patterns of inappropriate use. Once discovered, solutions can be developed that address the 30% or more of visits ED visits that are not necessary.

For example, one ED found their evening/weekend patient load included many patients who would have chosen the associated (but non-emergency) clinic, but the clinic was closed on evenings and weekends. Those patients viewed the ED as the “Department of Available Medicine.” By changing the clinic’s hours, the ED’s costs dropped and the clinic was able to staff appropriately for demand.
Some hospitals are using in-ED navigators to coach departing patients on the next use of the ED, reaching out proactively to direct frequent fliers to alternate sites, offering 24 hour staff nurse call lines, disease interventions, and personalized messaging for chronic condition management.  These programs not only save costs, they increase loyalty too.

Linda MacCracken
Vice President

RSS